Mow-Down in Motown

Bond insurers have a good case against Detroit for unfair treatment in bankruptcy.

Updated Sept. 3, 2014 2:04 p.m. ET

Federal Judge Steven Rhodes will begin hearings Tuesday to determine whether Detroit's readjustment plan fulfills the legal and fiscal requirements to exit Chapter 9 bankruptcy. The trial may provide investors a lesson, instructive but painful, in how politics can override law in municipal bankruptcies.

Since declaring bankruptcy in July 2013, Detroit has cut deals with nearly all of its major creditors. Workers, retirees and most bondholders this summer voted to accept the plan. Yet Judge Rhodes must still validate that...